BalckRock Inc. s offering its first-ever investment product directly in Bitcoin, marking a significant move into crypto markets by the world’s largest asset manager.
The new private Bitcoin trust seeks to track the price of the biggest cryptocurrency and responds to demand from large institutional clients seeking exposure to the asset even after its price plunged this year, New York-based BlackRock said in a statement Thursday.
“Despite the steep downturn in the digital-asset market, we are still seeing substantial interest from some institutional clients in how to efficiently and cost-effectively access these assets using our technology and product capabilities,” the company said.
Bitcoin has lost about half its value in 2022, while the collapse of the Terra ecosystem and hedge fund Three Arrows Capital have raised questions about the resilience of the market and prompted heightened regulatory scrutiny.
The announcement of the new Bitcoin trust is the second major move into digital assets in the past week by BlackRock, which manages $8.5 trillion, and shows how Wall Street’s biggest players are deepening their involvement in an industry that only a few years ago was criticized for being susceptible to fraud.
BlackRock last week unveiled a high-profile partnership with crypto exchange Coinbase Global inc. to allow institutional traders the ability oversee their Bitcoin investments alongside other portfolio assets such as stocks and bonds. The move sent Coinbase’s shares surging, with analysts concluding that the venture was a validation of digital assets and the crypto industry more broadly.
For BlackRock Chief Executive Officer Larry Fink, the Bitcoin trust is also a shift from four years ago, when he said he hadn’t heard from any client seeking exposure to crypto. In March of this year, Fink said the firm was studying the growing importance of digital assets and stablecoins and how they can be used to help clients. And the following month, the company joined a group of investors in Circle Internet Financial Ltd., the issuer of USD Coin, and said it would seek to serve as a primary manager of the stablecoin’s cash reserves.